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Japan Business Confidence Q4 2019

Japan: Business sentiment among big manufacturers plummets in Q4

According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers fell in the fourth quarter to 0, down from 5 in the third quarter and marking the lowest reading in nearly seven years. The survey is calculated by subtracting the number of respondents who say economic conditions are improving from those who say they are deteriorating.

The decrease in business sentiment among large manufactures in Q4 was most pronounced among those who produce processed metals, machinery, ships and motor vehicles. On the other hand, sentiment improved among large food and beverage manufacturers. Meanwhile, confidence among large non-manufacturing firms dipped to 20 in Q4, down from 21 in Q3.

Overall, Q4’s reading highlights that the Japanese economy continues to face headwinds from trade protectionism between both the U.S. and China, and Japan and Korea. Moreover, the raising of the sales tax in October to 10% from 8% also likely unnerved businesses. However, judging from this reading, it is the manufacturing sector that is bearing the brunt of these headwinds.

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